Financial Opinion and Insights

Have You Had Your ‘Stress Test’ Done?

Jim Lorenzen, CFP®, AIF®

Jim Lorenzen, CFP®, AIF®

No, I’m not talking about getting on the treadmill; I’m talking about a financial stress-test!

Most people – okay, just the smart ones – get a routine annual physical every year simply to make sure if anything is wrong, they can catch it in time!  But, if you’re like most people, you haven’t taken a financial stress-test in years… even though many suffered the consequences of this neglect back in 2008.

During the Great Depression, market investors saw a 23% hit in one year followed by a 21% slide the year after!  While everyone would like to have a “bullet-proof” retirement strategy, the one most likely to help people realize their life goals during uncertain times – when have the times ever been certain? – may simply be the common sense approach most of us can easily accept as an intuitive truth:

It begins with this basic 4-prong philosophy:

  1. It’s not about managing investments; it’s about achieving goals.
  2. Managing risk is more important than reaching for higher returns
  3. You can’t control markets or interest rates; but you can control tax exposure and investment costs
  4. Monitor everything, revise as needed, and keep your plan current.

Did you notice #4?  It begins with a plan.  Your plan for financial health begins just like a plan for physical health:  It begins with a ‘physical’ – an assessment of your current situation and an understanding of the lifestyle you envision in the future.  You also have to take into consideration your limitations, whether physical, financial, and/or emotional.

But, don’t be like the person who buys the gym membership and never uses the facilities.  A financial physical, whether annual or semi-annual, can keep your plan ‘on track’ and, even better, prepare you for those not unexpected detours you’ll surely find along the way.



Jim Lorenzen is a Certified Financial Planner® and an Accredited Investment Fiduciary® in his 20th year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.   IFG provides investment and fiduciary consulting to retirement plan sponsors and selected individual investors. Plan sponsors can sign-up for Retirement Plan Insights here.  IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader.  The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.